Is Market Equilibrium on the Horizon?
The Sarasota Real Estate Market has moderated in recent months, as has been widely reported including in my last few monthly newsletters. After several years of double-digit price growth and desperately low inventories of existing homes and condominiums to meet demand, the market was heavily weighted on the side of sellers. Serious buyers found the Sarasota market quickly pushing their anticipated budgets near or out-of-reach, especially in the low-mid market price points.
Over the last 12-months fluctuating median prices for existing single-family homes have moved 17.5% and condominiums have seen a spread in monthly median sale prices of 18.4%. Though year-over-year monthly reports show slightly softer variances, these shifting prices are causing some, especially in the moderate priced categories to have angst over whether to move or stay put, placing some pressure on sales activity.
Another closely watched Sarasota Real Estate Market dynamic is housing inventory. Last year the region was reporting a dearth of supply of existing properties with single-family homes sitting at just a 3.2 month supply and condos with only 3.1 months of available properties on the market. Since then inventory levels have improved considerably with single-family home stock now reported to be 19% greater and condos rising more than 43% when compared to last August. Although still shy of the “traditional” market equilibrium of 6-months of supply, this important market dynamic is contributing to slower price escalation and lengthened listing-to-sale periods.
The time it takes to sell a home or condo in the Sarasota Real Estate Market is a statistic we watch closely, especially as our peak selling season approaches. With more properties for buyers to choose from, it is natural for selling times to increase, which is why I have been encouraging my “prospective” selling clients to enter the game NOW. With selling periods averaging about 100 days from listing to closing, more than 30% higher over the year and increasing consistently, waiting to list is only delaying the potential sale further.
The number of total August property sales in the Sarasota Real Estate Market increased compared to July, but fell 10% when compared to prior year. In the price category where the most of my work is done – above $1 million – set against sales in August 2015, there were 38% more condo sales and 23% fewer single-family home transactions. Total sales volume rose over July with 5% more sales dollars in single-family homes and condos had 9% more. Year-over-year volume saw 3.9% less volume, likely the result of fewer distressed properties changing hands, and condominium transactions produced 1.4% more sales volume.
- Sarasota is averaging monthly residential real estate sales for the eight months of 2016 of $344 million vs. $330 million in 2015. August saw $330.6 million in transactions, 6% less than July and 3% less than a year ago.
- The monthly average of single family sales this year is 677 vs. 740 in 2015 and for condos the monthly sales are 312 vs. 371 last year through August.
- Single-family sales last month were down 11% from prior year, and down 2% from July 2016.
- Condominium sales were down 6% from last year in July and up 6% from July.
- S. real estate sales decreased 1% from July and increased less than 1% compared to last year, with single-family home sales growing just .6% and condos up 1.1%.
- Florida’s housing transactions saw single-family home sales grow 8.2% compared to last year and condo sales were up 3.5%. July sales in Florida had fallen considerably against prior year sales so this growth brought annual sales more in line with the steady growth seen in 2016.
- All cash sales in Sarasota continue to be strong with 38% of single-family and 62% of condos sales closed without a mortgage.
- Distressed sales in the Sarasota Real Estate Market August were only 6% of total sales, compared to 14% last year.
- New home building and sales in Sarasota and across the country remain strong with expectations from analysts that production and demand for new product will remain robust through the coming year.
- Just yesterday a report was released by Metrostudy, a respected leader in housing industry analytics. It ranked the North Port/Sarasota/Bradenton area the 3rd “hottest” new home market in the country. This mirrors recent surveys of national homebuilders, who remain extremely confident in the continued demand for new homes.
The monthly median price gains in 2016 have moved fairly steadily without any significant spikes. This moderation in prices is a positive sign of the market’s health and helps to create a more sustainable housing market. According to Trendgraphix, over the last three years, prices in the Sarasota Real Estate Market have seen the greatest upward shift in the under $250,000 segment and over $1 million tier with both seeing in excess of a 21% rise. In the mid-market range of prices, there has been just a 4.6% increase in median prices since August 2014. Industry experts are projecting a total of 5% price increase for the next 12-months and 3.5% for the 5 years after that.
- In August, Sarasota’s single-family homes were sold at a median price of $253,528 vs. $237,799 a year ago, an increase of nearly 7%. The year to date monthly median average is $247,972 vs. $216,587 last year.
- Condominium median sale price grew to $220,000, a small increase over August 2015.
- Florida median price for a single-family home is reported to be up 12.6% over last year, to $225,000, and condo median prices increased 6.7% to $160,000, just about equal to July prices.
- Nationally, median prices for single-family grew 5.1% to $242,200 and condos traded for 3.7% more than last year, now $225,100.
- The average sale price for houses in Sarasota was $359,394 in August vs. $331,011 a year ago, an 8.5% increase. The year to date average price sold is $351,757 vs. $314,860 last year.
- Sarasota’s condominiums sold for an average price of $330,379 vs. $304,615 a year ago, an 8.5% increase. The year to date average price sold is $336,705 vs. $281,573 last year.
- Sarasota properties sold at 95% of the list price.
Inventory of existing single-family homes and condominiums remained nearly stable with July. Early this year inventory showed its strongest replenishment, growing at double-digit pace over 2015. Each month since that point, the region has maintained stable inventory levels neither growing nor falling measurably. The largest growth in available properties for sale has taken place in the $200,000 – $600,000 range where single-family homes grew about 36% and condos have about 50% more units listed.
- Total available inventory in the Sarasota Real Estate Market has increased by 310 properties or 8% since the beginning of this year.
- For single-family homes inventory has only grown by 71 properties since the beginning of the year and by 20% from a year ago.
- Condominium inventory has grown by 239 properties or 19% since the beginning of the year and by 43% from a year ago.
- The Realtor Association of Sarasota-Manatee reports that there are 5.1 months of supply of condos and 4.1 months of single-family homes in inventory, still shy of a balanced market, which is defined by a 6-month supply of inventory, indicating the Sarasota Real Estate Market is still considered a “seller’s market” but inching toward equilibrium.
- Sarasota is averaging 1,147 new listings per month this year and currently shows a total available inventory of 4,207 properties for sale. Average number of properties sold this year is about 1,000 per month.
- Florida housing inventory is reported to have 4.2 months of single-family supply and 5.8 months on condos listed.
- National inventory is reported to be 4.6 months of supply of all housing types.
With the peak Sarasota Real Estate Market selling season just a few months away, I am expecting a good deal of activity, both from new listings and continued strong demand. Despite the many potential market disruptors, analysts and economists are expecting consumers to remain bullish on real estate through the next year.
Just this week, the National Association of REALTORS, Mortgage Bankers’ Association, Freddie Mac and Fannie Mae all released forecasts for the 2017 housing market. All groups project stronger selling activity than 2016, mostly as a result of Millennials buying homes for their growing families, as well as household balance sheets across the country steadily growing.
The closer our market moves to inventory equilibrium – meaning it is neither favoring sellers nor buyers – the less hyper-price escalation we will experience and listing-to-sale periods will continue to stretch longer. While there will not be a shift from sellers’ to buyers’ market overnight, there has been good progress made toward a more balanced environment. With all of these current and projected trends, the Sarasota Real Estate Market is in a healthy state and comfortably positioned to take us into the traditionally heavier buying months ahead.